Almost impossible to countenance that such an iconic brand should be in a position like this, especially as the yearly revenues are around the $1Billion US mark. But according to reports coming out of the mainstream press, Gibson is in serious trouble.
The official message released last week was succinct:
Gibson Brands, Inc. today announced that the company made a $16.6 million coupon payment to holders of its $375 million, 8.875% senior secured notes due 2018.
We're not financial experts, but it seems there are loans coming to term mounting to 100s of millions of dollars which the company will not be able to honour given its current financial situation. Attempts at refinancing to enable the company to continue trading appear to be proving difficult.
Signs appeared to things going pear-shaped back in 2011 after a raid by the US Justice Department and were found to be using endangered species of Madagascan woods and were fined around $350,0000.
The Nashville company has been building hand crafted and quality stringed instruments since 1906, with a reputation for high quality luthiers and craftsmen. Many iconic instruments have featured in the history of popular music with various rock-gods choosing to hang a Gibson on their shoulder.
The previous CEO Bill Lawrence quit after only a year in office, so the signs are not encouraging. However the core business - making iconic guitars appears to be sound, the diversification and purchasing of additional brands appears to be the company's downfall.
Last year, they closed down Cakewalk in an effort fo contain costs. Whatever the outcome, its sad news for employees of the company who will undoubtedly face serious restructuring.
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